Mortgage Daily Logo

ARMs Improve as 30 Year Bounces Off Low

Rates

Adjustable-rate mortgages improved over the past week. But the 30-year fixed-rate mortgage bounced off of its record low, though it might be lower in the next report. Top housing economists are mixed over where they expect mortgage rates will move.

The 30-year mortgage had been at the lowest level ever recorded for three consecutive weeks: 3.87 percent.

But the long-term mortgage lost its grip on the record low and rose 8 basis points from last week to average 3.95 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Feb. 23.

Freddie’s weekly survey of 125 lenders indicated that the 30-year fixed-rate mortgage was 4.95 percent in the same week last year.

In a Jan. 23 meeting, Federal Reserve Bank directors noted that recent economic data had somewhat improved. But the directors were cautious about the outlook and predicted only moderate growth during the coming quarters.

A look at this week’s Treasury market activity points to a rate decline by the time Freddie issues its next weekly survey. The yield on the 10-year Treasury note averaged 2.03 percent during the period that Freddie surveyed its lenders, while the 10-year yield closed at 1.99 percent today, based on Treasury Department data. The activity points to a roughly 4-basis-point decline in the next survey.

But a majority of panelists surveyed by Bankrate.com for the week Feb. 23 to Feb. 29 predicted that rates will rise at least 3 BPS over the next seven days or so. Another 29 percent predicted no change, and just 14 percent expected rates to fall.

Fannie Mae predicted in its monthly forecast that the 30-year mortgage will be locked in at 4.0 percent this entire year. The Mortgage Bankers Association is less optimistic, projecting that the 30 year will rise from 4.0 percent this quarter to 4.3 percent in the second quarter then increase 10 BPS every quarter through the end of 2013. Freddie’s forecast was the most aggressive, with the 30-year mortgage expected to go from 4.0 percent in the first quarter to 4.7 percent by the end of this year and 5.5 percent by the end of next year.

Borrowers inquiring about a jumbo loan were quoted a rate that was 64 BPS higher than a conforming loan, based on the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Feb. 17. The jumbo-conforming spread worsened from 61 BPS the prior week.

With a 3-basis-point rise from last week, the average 15-year fixed-rate mortgage was 3.19 percent. The spread between the 15 year and 30 year widened to 76 BPS from just 71 BPS in Freddie’s prior report, making the 15-year a more attractive option.

A 2-basis-point improvement was recorded for the five-year, Treasury-indexed, hybrid ARM, which averaged 2.80 percent in Freddie’s survey.

Freddie said that the one-year, Treasury-indexed ARM also fell, to 2.73 percent from 2.84 percent. The one-year averaged 3.40 percent during the week ended Feb. 24, 2011.

Fannie predicts that the one-year ARM will average 2.8 percent in the first half of 2012 and 2.9 percent during the second half. Freddie sees the one year at 2.9 percent in the first half and 3.0 percent in the second half.

The one-year ARM adjusts annually based on changes in the yield of the one-year Treasury note, which closed at 0.17 percent today, the same as last Thursday, according to data from the Department of the Treasury.

The six-month London Interbank Offered Rate, or LIBOR, was 0.75 percent on Wednesday, the same as a week earlier, Bankrate.com reported.

ARM products accounted for 4.13 percent of mortgage inquiries in the Mortgage Market Index report. ARM share fell from 4.75 percent seven days earlier.

ARM share of applications, according to Fannie, will be 6 percent during the first nine months of this year then slip to 5 percent. But MBA predicts that ARM share of originations will climb from 4 percent this quarter to 5 percent in the second quarter then spend the next three quarters at 6 percent.

Freddie, meanwhile, has ARM share of loan production at 14 percent this entire year and all of next year.

Fannie issued a servicing bulletin indicating that it is discontinuing the National Monthly Median Cost of Funds Index. The Office of Thrift Supervision announced in July 2011 that the index would be discontinued. The NMMC is being replaced by the Federal Cost of Funds Index.

The update means that Fannie Mae Index Code No.s 14 and 47 will be replaced with Index Code 76.

Related Posts

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago Weekly interest rates might continue holding Oct. 25, 2018 By SAM GARCIA Mortgage Daily Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last week, and more of the same is expected. On conventional loans utilized to finance a home purchase with amounts up to the...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rate Forecasts Have Little Change Ahead

Thirty-year mortgage rates moved lower this past week and this past month. Short- and long-term forecasts have little movement ahead for mortgage rates. Ellie Mae Inc.'s Origination Insight Report | September 2018 indicated that average 30-year note rates on...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Soar, Could Sink in Next Report

An expected surge in mortgage rates came to fruition this week. The latest forecast has fixed rates tumbling in next week's report. A new index for adjustable-rate mortgages moved lower. A stunning 19-basis-point surge from the preceding week left average 30-year...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Dip, But Likely to Skyrocket

Mortgage rates retreated a modest amount just one week after climbing to a seven-year high. The next rate report, however, is likely to reflect significant escalation. Prospective 30-year borrowers using the LendingTree network during September were offered an average...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI